Gambling Winnings or Losses - New Jersey.
While you can offset gambling losses on your tax returns, there are two key points to keep in mind. First, losses will only offset tax on your gambling wins, not for other forms of income. Second, there is a high bar in terms of the quality of documentation needed to prove gambling losses.
These winnings are taxable regardless of whether you have losing lottery tickets or other gambling losses to deduct. Your lottery and other gambling winnings can only be reported on the “other income” line of Form 1040. As a result, you're ineligible to file your taxes on the shorter Forms 1040A and 1040-EZ if you have gambling winnings to.
Nonprofessional gamblers report winnings as “other income” on line 21 of their tax returns. Gambling losses are deductible only to the extent of gambling winnings and are reported as itemized deductions on Schedule A that are not subject to the 2%-of-adjusted-gross-income threshold; therefore, deductions for gambling losses are not among the miscellaneous itemized deductions suspended by.
Those forms, and the easy access to win-loss information that online gambling provides, means that you’ll need to declare winnings on your federal tax returns. It is possible to offset losses, though to do this, you will need to ensure you have accurate records.
If you have gambling losses, you may be able to claim them to help offset winnings. In addition to federal taxes, you may have to pay state taxes, but this depends on your state of residence. If you gamble regularly, it may be a good idea to familiarize yourself with your state's laws to stay in compliance.
The following rules apply to casual gamblers. Gambling winnings are fully taxable and must be reported on your tax return. You must file Form 1040 (PDF) and include all of your winnings. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and casinos.
Any other gambling winnings subject to federal income tax withholding. Additional, if your winnings are reported on Form W-2G, federal taxes are withheld at a flat rate of 25% (28% if you don’t give the payer your taxpayer ID number).